Correlation Between 29670GAG7 and Anheuser Busch

Can any of the company-specific risk be diversified away by investing in both 29670GAG7 and Anheuser Busch at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining 29670GAG7 and Anheuser Busch into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WTRG 53 01 MAY 52 and Anheuser Busch Inbev, you can compare the effects of market volatilities on 29670GAG7 and Anheuser Busch and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in 29670GAG7 with a short position of Anheuser Busch. Check out your portfolio center. Please also check ongoing floating volatility patterns of 29670GAG7 and Anheuser Busch.

Diversification Opportunities for 29670GAG7 and Anheuser Busch

0.68

Correlation Coefficient

29670GAG7  Anheuser Busch

Poor diversification

The 3 months correlation between 29670GAG7 and Anheuser is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding WTRG 53 01 MAY 52 and Anheuser Busch Inbev in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anheuser Busch Inbev and 29670GAG7 is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on WTRG 53 01 MAY 52 are associated (or correlated) with Anheuser Busch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anheuser Busch Inbev has no effect on the direction of 29670GAG7 i.e., 29670GAG7 and Anheuser Busch go up and down completely randomly.

Pair Corralation between 29670GAG7 and Anheuser Busch

Assuming the 90 days trading horizon WTRG 53 01 MAY 52 is expected to generate 0.92 times more return on investment than Anheuser Busch. However, WTRG 53 01 MAY 52 is 1.09 times less risky than Anheuser Busch. It trades about -0.06 of its potential returns per unit of risk. Anheuser Busch Inbev is currently generating about -0.29 per unit of risk. If you would invest  9,928  in WTRG 53 01 MAY 52 on September 24, 2024 and sell it today you would lose (446.00) from holding WTRG 53 01 MAY 52 or give up 4.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	87.5%
Values	Daily Returns

WTRG 53 01 MAY 52  vs.  Anheuser Busch Inbev

WTRG 53 01

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WTRG 53 01 MAY 52 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 29670GAG7 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Anheuser Busch Inbev

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anheuser Busch Inbev has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with 29670GAG7 and Anheuser Busch

The main advantage of trading using opposite 29670GAG7 and Anheuser Busch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 29670GAG7 position performs unexpectedly, Anheuser Busch can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Anheuser Busch will offset losses from the drop in Anheuser Busch's long position.

The idea behind WTRG 53 01 MAY 52 and Anheuser Busch Inbev pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.